Browsing by Subject "economics"
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Item Essays on Modeling the Economic Impacts of a Foreign Animal Disease on the United States Agricultural Sector(2011-02-22) Hagerman, Amy DeannForeign animal disease can cause serious damage to the United States (US) agricultural sector and foot-and-mouth disease (FMD), in particular, poses a serious threat. FMD causes death and reduced fecundity in infected animals, as well as significant economic consequences. FMD damages can likely be reduced through implementing pre-planned response strategies. Empirical studies have evaluated the economic consequences of alternative strategies, but typically employ simplified models. This dissertation seeks to improve US preparedness for avoiding and/or responding to an animal disease outbreak by addressing three issues related to strategy assessment in the context of FMD: integrated multi region economic and epidemic evaluation, inclusion of risk, and information uncertainty. An integrated economic/epidemic evaluation is done to examine the impact of various control strategies. This is done by combining a stochastic, spatial FMD simulation model with a national level, regionally disaggregated agricultural sector mathematical programming economic model. In the analysis, strategies are examined in the context of California's dairy industry. Alternative vaccination, disease detection and movement restriction strategies are considered as are trade restrictions. The results reported include epidemic impacts, national economic impacts, prices, regional producer impacts, and disease control costs under the alternative strategies. Results suggest that, including trade restrictions, the median national loss from the disease outbreak is as much as $17 billion when feed can enter the movement restriction zone. Early detection reduces the median loss and the standard deviation of losses. Vaccination does not reduce the median disease loss, but does have a smaller standard deviation of loss which would indicate it is a risk reducing strategy. Risk in foreign animal disease outbreaks is present from several sources; however, studies comparing alternative control strategies assume risk neutrality. In reality, there will be a desire to minimize the national loss as well as minimize the chance of an extreme outcome from the disease (i.e. risk aversion). We perform analysis on FMD control strategies using breakeven risk aversion coefficients in the context of an outbreak in the Texas High Plains. Results suggest that vaccination while not reducing average losses is a risk reducing strategy. Another issue related to risk and uncertainty is the response of consumers and domestic markets to the presence of FMD. Using a highly publicized possible FMD outbreak in Kansas that did not turn out to be true, we examine the role of information uncertainty in futures market response. Results suggest that livestock futures markets respond to adverse information even when that information is untrue. Furthermore, the existence of herding behavior and potential for momentum trading exaggerate the impact of information uncertainty related to animal disease.Item ONLINE REVIEWS AND PRODUCT QUALITY IN THE WEB HOSTING INDUSTRY(2012-04-19) Haney, Arthur; Kohlhase, Janet; Jiu, Brett; Thornton, Rebecca A.Consumers purchasing Internet-based services from companies that lack physical presences have a unique problem. They do not have access to the information that they require in order to discern the quality of the company's products. In lieu of alternatives, they may turn to publicly available reviews from other consumers to aid them in coming to a decision regarding product quality. Using hedonic regression analysis, this study examines the potential for online reviews to function as a proxy for product quality. Estimating our initial hedonic model using OLS reveals that the number of negative reviews posted for a company is associated with decreased prices. Estimating a new hedonic model that controls for economies of scale provides the same conclusion, though the effect is slightly decreased. The results of our estimates provide statistical support of our initial hypothesis.Item Regional Differences in Corn Ethanol Production: Profitability and Potential Water Demands(2010-07-14) Higgins, Lindsey M.Through the use of a stochastic simulation model this project analyzes both the impacts of the expanding biofuels sector on water demand in selected regions of the United States and variations in the profitability of ethanol production due to location differences. Changes in consumptive water use in the Texas High Plains, Southern Minnesota, and the Central Valley of California, as impacted by current and proposed grain-based ethanol plants were addressed. In addition, this research assesses the potential impacts of technologies to reduce consumptive water use in the production of ethanol in terms of water usage and the economic viability of each ethanol facility. This research quantifies the role of corn ethanol production on water resource availability and identifies the alternative water pricing schemes at which ethanol production is no longer profitable. The results of this research show that the expansion of regional ethanol production and the resulting changes in the regional agricultural landscapes do relatively little to change consumptive water usage in each location. The California Central Valley has the highest potential for increased water usage with annual water usage in 2017 at levels 15% higher than historical estimates, whereas Southern Minnesota and the Texas High Plains are predicted to have increases of less than 5% during the same time period. Although water use by ethanol plants is extremely minor relative to consumptive regional agricultural water usage, technological adaptations by ethanol facilities have the potential to slightly reduce water usage and prove to be economically beneficial adaptations to make. The sensitivity of net present value (NPV) with respect to changes in water price is shown to be extremely inelastic, indicating that ethanol producers have the ability to pay significantly more for their fresh water with little impact on their 10 year economic performance.Item Select Economic Implications for the Biological Control of Arundo donax along the Rio Grande(2010-10-12) Seawright, Emily KayeArundo donax, or giant reed, is a large, bamboo-like plant native to Spain that has invaded several thousand acres of the Rio Grande riparian in Texas. The plant grows to 18-24 feet, consuming large quantities of water per acre per year. With concern of increased water demands in the Texas Lower Rio Grande Valley region, the United States Department of Agriculture-Agricultural Research Service (USDA)ARS) is investigating four herbivorous insects as potential biological control agents for Arundo donax to facilitate increased water supply. This study examines select economic implications for agricultural water users in the United States of applying these biological control agents along the Rio Grande. The research includes (a) estimating the value of the water saved due to the reduction of Arundo donax, (b) a benefit-cost analysis, (c) regional economic impact analysis, and (d) an estimate of the per-unit cost of water saved over a 50-year planning horizon (2009 through 2058). The model ArundoEcon is used to perform a deterministic analyses using low- and high-marginal-composite acre values. Regional results indicate present values of farmlevel benefits ranging from $97.80 to $159.87 million. Benefit-cost ratios are calculated with normalized prices and range from 4.38 to 8.81. Sensitivity analyses provide a robust set of results for Arundo water use, replacement species water use, Arundo expansion rate after control, value of water, and the cost of the program. The pre-production processes and farm-gate economic impact analysis is estimated using multipliers from the IMPLAN model. Regional results reveal a range of $8.90 to $17.94 million annually in economic output and 197 to 351 new jobs for the year 2025. Further results show the cost per acre-foot of water saved is $44.08. This amount is comparable to other projects designed to conserve water in the region. The USDA)ARS, Weslaco, Texas Arundo donax biological control project realizes positive results for the benefit-cost ratios, economic impact analyses, and competitive results for the per-unit cost of saving water. These positive results indicate this project will have positive economic implications for the U.S. and the Texas Lower Rio Grande Valley.Item The Economic and Financial Implications of Supplying a Bioenergy Conversion Facility with Cellulosic Biomass Feedstocks(2012-02-14) McLaughlin, WillComprehensive analyses are conducted of the holistic farm production-harvesting-transporting-pre-refinery storage supply chain paradigm which represents the totality of important issues affecting the conversion facility front-gate costs of delivered biomass feedstocks. Targeting the Middle Gulf Coast, Edna-Ganado, Texas area, mathematical programming in the form of a cost-minimization linear programming model(Sorghasaurus) is used to assess the financial and economic logistics costs for supplying a hypothetical 30-million gallon conversion facility with high-energy sorghum (HES) and switchgrass (SG) cellulosic biomass feedstock for a 12-month period on a sustainable basis. A corporate biomass feedstock farming entity business organization structure is assumed. Because SG acreage was constrained in the analysis, both HES and SG are in the optimal baseline solution, with the logistics supply chain costs (to the front gate of the conversion facility) totaling $53.60 million on 36,845 acres of HES and 37,225 acres of SG (total farm acreage is 187,760 acres, including HES rotation acres), i.e., $723.67 per harvested acre, $1.7867 per gallon of biofuel produced not including any conversion costs, and $134.01 per dry ton of the requisite 400,000 tons of biomass feedstock. Several sensitivity scenario analyses were conducted, revealing a potential range in these estimates of $84.75-$261.52 per dry ton of biomass feedstock and $1.1300-$3.4870 per gallon of biofuel. These results are predicated on simultaneous consideration of capital and operating costs, trafficable days, timing of operations, machinery and labor constraints, and seasonal harvested biomass feedstock yield relationships. The enhanced accuracy of a comprehensive, detailed analysis as opposed to simplistic approach of extrapolating from crop enterprise budgets are demonstrated. It appears, with the current state of technology, it is uneconomical to produce cellulosic biomass feedstocks in the Middle Gulf Coast, Edna-Ganado, Texas area. That is, the costs estimated in this research for delivering biomass feedstocks to the frontgate of a cellulosic facility are much higher than the $35 per ton the Department of Energy suggests is needed. The several sensitivity scenarios evaluated in this thesis research provides insights in regards to needed degrees of advancements required to enhance the potential economic competitiveness of biomass feedstock logistics in this area.Item The Future of Biofuels: An Economic Analysis of the Design and Operation of a Microalgae Facility in Texas and the Southwestern United States(2011-10-21) Allison, Marc S.The world of energy is changing. With rising energy costs and concerns over the supply of energy materials, more research is being conducted into alternative sources of fuel and microalgae is one of the sources being researched, although much research had been conducted on it as a part of the Aquatic Species Program from the 1970s to the early 1990s. With the emergence of microalgae as a source of alternative energy, the need for an economic analysis of microalgae has arisen. This research studies the economic feasibility of the design and operation of a microalgae production facility in two Texas locations (Pecos and Corpus Christi) and in southeastern New Mexico using a stochastic simulation model. It examines the production levels needed for the facility to be profitable and also some facility designs necessary for that profitability. It also measures several annual financial indicators so that potential investors have some estimates of the future profitability of the microalgae industry. The results show that for microalgae to become a viable commercial operation, production must be improved beyond the current levels and the levels suggested by the literature. Production needs to be at least 0.8 g/L/day with 40 percent oil content and 24 inches of water depth. Production must be improved through increasing growth rates and oil contents at greater water depths. Production can be improved through nutrient and carbon dioxide usage, two elements that are being heavily researched. Water usage will become a major focus because of the limited resources and the quantities necessary to operate a commercial-scale facility. With the necessary improvements in technology and research, microalgae could prove to be a viable source of alternative energy.